Dubai property market shows signs of weakness

DUBAI,— Dubai’s property market is showing early signs of weakness nearly three weeks after the start of the U.S.-Israeli war on Iran, as new data points to a sharp fall in transactions and some agents report price cuts.

The conflict, along with strikes by Tehran on Israel, U.S. bases and Gulf states including the United Arab Emirates, has challenged Dubai’s reputation as a safe destination for global wealth.

Real estate transaction volumes in the UAE dropped 37% from a year earlier in the first 12 days of March and fell 49% from the previous month, Goldman Sachs analysts said in a note released this week.

Some homes are being marketed at notable discounts, with reductions of 12% to 15%, based on comments from agents and messages reviewed by Reuters on social media.

One example involved a property near the Burj Khalifa, the world’s tallest building. An agent shared that the seller wanted a quick sale at $650,000, about 12% below a prior asking price of $735,000 due to the current situation. The agent requested anonymity citing sensitivity.

An off-plan apartment on Palm Jumeirah was also listed at about $2 million, roughly 15% lower than its original price, according to a message circulated in a WhatsApp group created a week after the war began.

Concerns about a slowdown were already present after five years of rising prices in the UAE property market, which has tracked Dubai’s rapid development.

The ongoing conflict is now seen as a major test for the sector, where demand has been driven by wealthy newcomers attracted by a tax-free environment.

Shares in developers have declined. Emaar Properties, the builder behind the Burj Khalifa, has dropped more than 26% on the Dubai stock exchange since the war started.

Goldman Sachs said the total value of completed deals so far this month has fallen by about half compared with February.

The decline is larger than during the Dubai floods in 2024 or a previous Iran-Israeli conflict last June. However, the median transaction price is down only 3% compared with a year ago.

Analysts at Citi said the war introduces considerable risk to Dubai’s population growth outlook, as it could discourage homebuyers and investors.

They now expect population growth of about 1% this year, followed by 2% to 2.5% annually between 2027 and 2031. This compares with around 4% growth in recent years.

In a more negative scenario, Citi said property prices could fall by an average of 7% per year from now through 2028.

Despite these signals, market participants say activity has not stopped.

Imran Sheikh, founder and chairman of real estate investment firm BlackOak, said investor behavior varies widely in times of uncertainty.

He said data shows transactions are still taking place and noted that one client from Africa has asked the firm to proceed with any opportunities that may arise over the next month.

A high-end off-plan unit valued at about $25 million on Palm Jumeirah was sold this week to former UFC heavyweight champion Francis Ngannou.

Developer Arada said the deal reflects continued interest in branded luxury properties in Dubai.

Himanshu Khandelwal, chief executive of investment firm Asas Capital, told Reuters that many investors are actively seeking discounted deals.

He said Emirati buyers and Indian family offices have contacted his firm asking about distressed sales or properties offered at reduced prices, indicating readiness to invest.

At the same time, some developers suggest that widespread price reductions are not yet visible.

Emaar Properties founder and chairman Mohamed Alabbar said in an interview with CNBC that sellers are largely holding firm on pricing.

Tauseef Khan, founder and chairman of Dugasta Properties, told Reuters that most buyers remain focused on long-term value rather than short-term price changes, adding that broad discounting has not taken hold.

(With files from Reuters)

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